METROBRAND

Reverts to Healthy Growth Trajectory

(MBL), India’s leading organised footwear retailer, reported accelerated growth in Q3FY26, with momentum reverting to its historical 15–18% levels. Despite regulatory delays impacting its sportswear segment, strong demand traction, festive and wedding season sales, and robust network expansion underpin optimism. Following a sharp 30% stock correction in six months, valuations have turned reasonable, prompting a stance upgrade to Overweight. Financial & Operational Highlights - Q3FY26 revenue growth: +15% YoY, taking 9MFY26 growth to +12% YoY. - Festive and wedding season demand boosted sales. - GST rate cut (Sep 2025) on footwear priced ₹1,000–2,500 (12% → 5%) improved consumer sentiment; discounts passed on were 3–4%. - Growth outlook: ~15% YoY, with 10% like-for-like (LFL) growth from existing stores and 5% from new openings. Network Expansion - Net new stores in 9MFY26: 82, taking total to 990 stores across 212 cities. - Expansion broad-based across formats; entry into 7 new cities. - Online business scaling rapidly: +35% YoY growth in 9MFY26, revenue share rising to 13.2% (vs. 11% in 9MFY25). - Omni-channel presence via own brand sites, partner sites, and leading marketplaces. New Formats & Partnerships - Exclusive partnership with Clarks (June 2025); full rollout expected mid-FY27. - Launch of Metro Activ (affordable sports performance format) in Tier-1/2 cities; initial stores in Indore, Dehradun, Jodhpur. - Expansion of Footlocker (5 stores) and New Era (6 stores) in 9MFY26. - FILA repositioning expected to ramp up sports/athleisure segment by FY27. Valuation & Outlook - CMP: ₹948; trades at 56x FY27E P/E. - Stock corrected ~30% in six months, creating attractive entry levels. - Strong demand, network expansion, and sportswear ramp-up support long-term growth. - Near-term risks: BIS compliance delays and competitive intensity, but medium-term trajectory remains intact.